Malaysia’s economy shrinks by 17.1 per cent in Q2, worst slump since Asian financial crisis

The coronavirus pandemic and three-month lockdown hit business activity and supply chains, causing the worst contraction since the 1998 crisis

The central bank revised its GDP forecast lower, but said it expects a gradual recovery in the second half as the economy reopens

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A man walks in front of the Petronas Twin Towers in Kuala Lumpur. Malaysia’s economy contracted in the second quarter as a result of the Covid-19 restrictions. Photo: Reuters

Published: 2:01pm, 14 Aug 2020Updated: 11:21pm, 14 Aug 2020

Hit hard by the impact of the coronavirus pandemic and three-month lockdown, the Malaysian economy contracted by 17.1 per cent in its second quarter on a year on year basis, as the central bank cut its gross domestic product forecast for the year.

This second quarter performance is the weakest since the last quarter of 1998, during the peak of the Asian financial crisis.

After Covid-19 numbers skyrocketed in March, the Malaysian government announced a national movement control order that saw businesses closed, restricted production and decreased consumption, resulting in demand and supply shocks.

Borders were also closed, affecting the tourism industry, which is a key sector in the Malaysian economy.

The central bank on Friday said the nation’s 2020 GDP forecast has been revised to between -3.5 per cent and -5.5 per cent, although it is expected to improve to between 5.5 per cent and 8 per cent in 2021.